{"id":7552,"date":"2026-07-02T10:19:24","date_gmt":"2026-07-02T15:19:24","guid":{"rendered":"https:\/\/stpaulfcu.org\/?post_type=education&#038;p=7552"},"modified":"2026-07-02T10:19:26","modified_gmt":"2026-07-02T15:19:26","slug":"the-truth-about-auto-dealer-loans","status":"publish","type":"education","link":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/","title":{"rendered":"The Truth About Auto Dealer Loans"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.<\/p>\n\n\n\n<h2 id=\"h-the-fine-print\" class=\"wp-block-heading\"><strong>The Fine Print<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The low APRs dealers advertise usually come with bigger down payments.\u00a0<\/li>\n\n\n\n<li>Low APRs are typically limited to any on-site stock the dealership wants to move (which means you may not get the car you want).<\/li>\n\n\n\n<li>There may be pre-payment penalties that come along with it.\u00a0<\/li>\n<\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"h-the-process\" class=\"wp-block-heading\"><strong>The Process<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Even if you are paying cash or arranging your own financing, you still have to sit down with the finance manager. They\u2019ll be the one doing the paperwork and title papers associated with your purchase. The finance manager will still try to sell you on dealership financing, telling you all the so-called advantages of letting them arrange the car loan for you. They may use computer programs and charts designed to convince you. Why?&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bottom line, the dealer wants to profit. While this may incentivize them to give you a good financing deal, consider that the finance manager\u2019s sole purpose is to ensure you walk out of that dealership with the highest monthly payment possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s how they profit:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The financing itself.<\/strong>\u00a0Banks will pay a certain percentage of the amount financed to the dealership. The higher your interest rate, the higher their commission.<\/li>\n\n\n\n<li><strong>Extended warranties.<\/strong>\u00a0There are many different warranty companies and many different levels of coverage available. Most dealers mark up the price anywhere from $400 to $2,000.<\/li>\n\n\n\n<li><strong>Credit Insurance.<\/strong>\u00a0Dealers earn about 50% of the insurance premium on your coverage.<\/li>\n\n\n\n<li><strong>Add-ons.<\/strong>\u00a0The finance manager will try to sell you a variety of products. Everything from rustproofing and paint sealant to window etching and alarm systems. All these items carry a huge markup.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"h-the-alternative\" class=\"wp-block-heading\"><strong>The Alternative<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Is there a way around dealer loans? Sure. Surveys show that credit unions offer the best auto loan rates of any financial institution. Once you\u2019ve been approved, you can shop with peace of mind! Additionally, take these preventative measures when shopping with your own financing methods:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>NEVER negotiate a car deal based on payment.<\/strong>\u00a0If the salesperson asks you what payment you\u2019d like to have, tell them not to worry about the payment. You want to negotiate a total price on the car. A payment that sounds too good could actually mean a longer loan term and higher interest rate.<\/li>\n\n\n\n<li><strong>Don\u2019t let the salesperson know you\u2019ve arranged your own financing.<\/strong>\u00a0If you tell your salesperson up front that you have already arranged financing and he relays this information to the sales manager, they might make the decision to hold out for more profit on the car deal thinking that they\u2019re not going to make anything on the loan.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.<\/p>\n\n\n\n<h2 id=\"h-the-fine-print-0\" class=\"wp-block-heading\"><strong>The Fine Print<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The low APRs dealers advertise usually come with bigger down payments.\u00a0<\/li>\n\n\n\n<li>Low APRs are typically limited to any on-site stock the dealership wants to move (which means you may not get the car you want).<\/li>\n\n\n\n<li>There may be pre-payment penalties that come along with it.\u00a0<\/li>\n<\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"h-the-process-0\" class=\"wp-block-heading\"><strong>The Process<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Even if you are paying cash or arranging your own financing, you still have to sit down with the finance manager. They\u2019ll be the one doing the paperwork and title papers associated with your purchase. The finance manager will still try to sell you on dealership financing, telling you all the so-called advantages of letting them arrange the car loan for you. They may use computer programs and charts designed to convince you. Why?&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bottom line, the dealer wants to profit. While this may incentivize them to give you a good financing deal, consider that the finance manager\u2019s sole purpose is to ensure you walk out of that dealership with the highest monthly payment possible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here\u2019s how they profit:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The financing itself.<\/strong>\u00a0Banks will pay a certain percentage of the amount financed to the dealership. The higher your interest rate, the higher their commission.<\/li>\n\n\n\n<li><strong>Extended warranties.<\/strong>\u00a0There are many different warranty companies and many different levels of coverage available. Most dealers mark up the price anywhere from $400 to $2,000.<\/li>\n\n\n\n<li><strong>Credit Insurance.<\/strong>\u00a0Dealers earn about 50% of the insurance premium on your coverage.<\/li>\n\n\n\n<li><strong>Add-ons.<\/strong>\u00a0The finance manager will try to sell you a variety of products. Everything from rustproofing and paint sealant to window etching and alarm systems. All these items carry a huge markup.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"h-the-alternative-0\" class=\"wp-block-heading\"><strong>The Alternative<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Is there a way around dealer loans? Sure. Surveys show that credit unions offer the best auto loan rates of any financial institution. Call or stop by [Credit_union] for a loan application. Once you\u2019ve been approved, you can shop with peace of mind! Additionally, take these preventative measures when shopping with your own financing methods:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>NEVER negotiate a car deal based on payment.<\/strong>\u00a0If the salesperson asks you what payment you\u2019d like to have, tell them not to worry about the payment. You want to negotiate a total price on the car. A payment that sounds too good could actually mean a longer loan term and higher interest rate.<\/li>\n\n\n\n<li><strong>Don\u2019t let the salesperson know you\u2019ve arranged your own financing.<\/strong>\u00a0If you tell your salesperson up front that you have already arranged financing and he relays this information to the sales manager, they might make the decision to hold out for more profit on the car deal thinking that they\u2019re not going to make anything on the loan.<\/li>\n<\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re ready to go car shopping, get preapproved with St. Paul Federal Credit Union. <a href=\"https:\/\/stpaulfcu.org\/services\/auto-loans\/\">Apply today<\/a>, it\u2019s fast and easy!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know. The Fine Print The Process Even if you are paying cash or arranging your own financing, you still have to sit down with the finance manager. They\u2019ll be the one [&hellip;]<\/p>\n","protected":false},"featured_media":7553,"template":"","education-category":[194],"class_list":["post-7552","education","type-education","status-publish","has-post-thumbnail","hentry","education-category-tips-resources"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Truth About Auto Dealer Loans - St. Paul Federal Credit Union<\/title>\n<meta name=\"description\" content=\"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Truth About Auto Dealer Loans\" \/>\n<meta property=\"og:description\" content=\"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/\" \/>\n<meta property=\"og:site_name\" content=\"St. Paul Federal Credit Union\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/stpaulfcu.org\/\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-02T15:19:26+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2026\/06\/AutoDealerLoans.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1536\" \/>\n\t<meta property=\"og:image:height\" content=\"1024\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@StPaulFCU\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/\",\"url\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/\",\"name\":\"The Truth About Auto Dealer Loans - St. Paul Federal Credit Union\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/stpaulfcu.org\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/AutoDealerLoans.png\",\"datePublished\":\"2026-07-02T15:19:24+00:00\",\"dateModified\":\"2026-07-02T15:19:26+00:00\",\"description\":\"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/#primaryimage\",\"url\":\"https:\\\/\\\/stpaulfcu.org\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/AutoDealerLoans.png\",\"contentUrl\":\"https:\\\/\\\/stpaulfcu.org\\\/wp-content\\\/uploads\\\/2026\\\/06\\\/AutoDealerLoans.png\",\"width\":1536,\"height\":1024,\"caption\":\"One person sits at an auto dealership desk, handing financing papers over to a car buyer.\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/the-truth-about-auto-dealer-loans\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/stpaulfcu.org\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Education\",\"item\":\"https:\\\/\\\/stpaulfcu.org\\\/education\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"The Truth About Auto Dealer Loans\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#website\",\"url\":\"https:\\\/\\\/stpaulfcu.org\\\/\",\"name\":\"St. Paul Federal Credit Union\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/stpaulfcu.org\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#organization\",\"name\":\"St. Paul Federal Credit Union\",\"url\":\"https:\\\/\\\/stpaulfcu.org\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/stpaulfcu.org\\\/wp-content\\\/uploads\\\/2023\\\/07\\\/logo.png\",\"contentUrl\":\"https:\\\/\\\/stpaulfcu.org\\\/wp-content\\\/uploads\\\/2023\\\/07\\\/logo.png\",\"width\":264,\"height\":46,\"caption\":\"St. Paul Federal Credit Union\"},\"image\":{\"@id\":\"https:\\\/\\\/stpaulfcu.org\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/stpaulfcu.org\\\/\",\"https:\\\/\\\/x.com\\\/StPaulFCU\"]}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"The Truth About Auto Dealer Loans - St. Paul Federal Credit Union","description":"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/","og_locale":"en_US","og_type":"article","og_title":"The Truth About Auto Dealer Loans","og_description":"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.","og_url":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/","og_site_name":"St. Paul Federal Credit Union","article_publisher":"https:\/\/www.facebook.com\/stpaulfcu.org\/","article_modified_time":"2026-07-02T15:19:26+00:00","og_image":[{"width":1536,"height":1024,"url":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2026\/06\/AutoDealerLoans.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_site":"@StPaulFCU","twitter_misc":{"Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/","url":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/","name":"The Truth About Auto Dealer Loans - St. Paul Federal Credit Union","isPartOf":{"@id":"https:\/\/stpaulfcu.org\/#website"},"primaryImageOfPage":{"@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/#primaryimage"},"image":{"@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/#primaryimage"},"thumbnailUrl":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2026\/06\/AutoDealerLoans.png","datePublished":"2026-07-02T15:19:24+00:00","dateModified":"2026-07-02T15:19:26+00:00","description":"Ever wonder how auto dealers can afford to advertise loans with APRs as low as 0%? Here\u2019s what your dealer doesn\u2019t want you to know.","breadcrumb":{"@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/#primaryimage","url":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2026\/06\/AutoDealerLoans.png","contentUrl":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2026\/06\/AutoDealerLoans.png","width":1536,"height":1024,"caption":"One person sits at an auto dealership desk, handing financing papers over to a car buyer."},{"@type":"BreadcrumbList","@id":"https:\/\/stpaulfcu.org\/education\/the-truth-about-auto-dealer-loans\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/stpaulfcu.org\/"},{"@type":"ListItem","position":2,"name":"Education","item":"https:\/\/stpaulfcu.org\/education\/"},{"@type":"ListItem","position":3,"name":"The Truth About Auto Dealer Loans"}]},{"@type":"WebSite","@id":"https:\/\/stpaulfcu.org\/#website","url":"https:\/\/stpaulfcu.org\/","name":"St. Paul Federal Credit Union","description":"","publisher":{"@id":"https:\/\/stpaulfcu.org\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/stpaulfcu.org\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/stpaulfcu.org\/#organization","name":"St. Paul Federal Credit Union","url":"https:\/\/stpaulfcu.org\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/stpaulfcu.org\/#\/schema\/logo\/image\/","url":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2023\/07\/logo.png","contentUrl":"https:\/\/stpaulfcu.org\/wp-content\/uploads\/2023\/07\/logo.png","width":264,"height":46,"caption":"St. Paul Federal Credit Union"},"image":{"@id":"https:\/\/stpaulfcu.org\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/stpaulfcu.org\/","https:\/\/x.com\/StPaulFCU"]}]}},"_links":{"self":[{"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/education\/7552","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/education"}],"about":[{"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/types\/education"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/media\/7553"}],"wp:attachment":[{"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/media?parent=7552"}],"wp:term":[{"taxonomy":"education-category","embeddable":true,"href":"https:\/\/stpaulfcu.org\/api\/wp\/v2\/education-category?post=7552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}